It takes expenses and debt, no time to add up, and even before you know it, you find yourself at the brink of bankruptcy. While, at the time, bankruptcy seems like the only viable option, however, as each situation is different, filing for insolvency immediately may not be the ideal option.
You have to pay fees with filing for bankruptcy while exploring your options with a debt counselor is usually free. So before you jump on the bankruptcy bandwagon, it is best to reach out to a credit counseling agency. The Government of Canada requires you to go through an insolvency process. Upon completion, the debtor can receive a bankruptcy discharge or, in most cases, a consumer proposal certificate of compliance.
Let’s explore the viability and the difference between the stow options in more detail.
Credit counseling is an assessment to help the debtor determine their options. It requires you to discuss your station and explore options to clear your debt. The method enables you to figure out the most effective way to clear your debts. In addition, it allows you to find alternatives to filing for bankruptcy.
While it is true that bankruptcy is the only viable option in some cases, if you run a business where creditors are bothering you, and you can’t seem to pay your employees and are getting threats of getting taken to court, you might have to consider bankruptcy. As it allows you to pay off debts quicker, it will halt collection, lawsuit, and wage garnishment activities. While we also must not forget that there are fees associated with this option and that the insolvency process will permanently reflect on your public records. Even though your debts will be cleared, the permanent record will create issues with credit, loans, financing, and housing later on in life. And should therefore be considered as the absolute last resort.
This is why you should consider going to a counselor before filing for insolvency. The best thing is that most credit counseling agencies offer a free and no-obligation consultation, which means you will lose nothing as a result.
Credit counselors review your income, expenses, assets, and even your spending habits. This allows the credit counselor to determine the best course to tackle your unique needs. Going through this process will also enhance your financial literacy. And it will allow you to get answers to all your debt-related queries. So in case you are unsure about what route to take or the options available to you, they will provide you with viable options to resolve your issues more effectively.
The financial assessment that you acquire will also enable you to handle your finances better independently. Bankruptcy, as we discussed, is not the only option; other choices include debt consolidation, credit counseling, consumer proposal, or handling debts on your own.